Apple Seeks White House Approval for Sourcing Chips from Blacklisted Chinese Firm
The ongoing restrictions imposed by the U.S. government on Chinese enterprises are increasingly impacting major American corporations, notably Apple.
Amidst a critical shortage of memory chips and an alarming surge in prices, Apple reportedly aims to persuade the White House to permit collaboration with a blacklisted Chinese firm, ChangXin Memory Technologies (CXMT).
As per a report from the Financial Times, Apple is lobbying the Trump administration for permission to procure memory chips from CXMT, a top-tier Chinese memory chip manufacturer that has found itself on the Pentagon’s blacklist due to alleged ties to the People’s Liberation Army.
Gaining CXMT as a supplier could significantly alleviate the pressures Apple faces from its own suppliers amid escalating costs.
This lobbying effort reveals the precarious situation confronting leading American tech firms, where soaring memory chip prices intersect with stringent national security regulations targeting Chinese manufacturers.
According to the report, Apple has made its case to the Commerce Department and engaged various White House officials over a month ago, in an effort to mitigate the financial strains caused by rising memory chip costs.
Apple’s Engagement with Chinese Military Companies
Under the Biden administration, both ChangXin Memory Technologies and Yangtze Memory Technologies Co., Ltd. (YMTC) have been designated as companies associated with the Chinese military.
While Apple technically does not face outright prohibition on acquiring chips from these entities, the Pentagon’s inclusion of them on its military blacklist—known as the Pentagon’s 1260H list—places a significant reputational risk on any U.S. enterprise utilizing their products, despite the absence of legal constraints.
Earlier this year, the Pentagon briefly updated its 1260H list before retracting it within an hour, following backlash from various White House personnel.
Upon its subsequent re-release, both CXMT and YMTC were reinstated on the ban list. The report indicates that should the administration approve Apple’s procurement from CXMT, it would likely face vociferous opposition from Congress, as the firm is viewed as a national champion in China.
John Moolenaar, the Republican chair of the House China Committee, cautioned that “Apple’s partnership with a Chinese military firm would constitute a grievous error.”
He further asserted that assisting the Chinese Communist Party in its ambitions to dominate critical supply chains could render America’s tech sector increasingly reliant on China, particularly during a time when collaborative secure tech supply chains with allies are paramount.
Last year, Apple faced significant criticism when it entertained purchasing memory chips from YMTC for its iPhones destined for the Chinese market.
Marco Rubio, then the leading Republican on the Senate Intelligence Committee, warned that “Apple was engaging in perilous activity,” cautioning that any such move would attract unprecedented scrutiny from federal authorities.
Globally, the memory chip landscape remains heavily consolidated, dominated by three major players—Micron, SK Hynix, and Samsung.
Apple’s procurement strategy includes reliance on domestic chipmaker Micron alongside South Korea’s Samsung and SK Hynix for the DRAM chips requisite for its devices.
Price Increases for MacBooks and iPads
This week, Apple announced increased prices for its iPads and MacBooks, attributing the decision to soaring costs of memory and storage chips—expenses deemed “unsustainable.”
This rare strategic pivot marked a significant moment for the company, as the price hikes collectively diminished its market capitalization by $263 billion, marking its second-largest single-day loss.
Source link: Timesofindia.indiatimes.com.
